In this article we discuss how to acquire wealth overtimes you might think you already know how to do so but do you really know the 2 sound strategies to make money?
A little bit of everything is required because the timeless fundamental principles are reveal today and this is priceless the eighth wonder of the world as Albert Einstein says.
You are in business for sometimes or you have started your business and have a steady income stream you are selling your products and services focusing on growing your business to a profitable position.
In business there are other factors besides technical expertise that lie within you and has a strong influence on your ability to grow your business as well as bringing it to profitability. This article discusses trial and tested methodologies plus reveal the 2 most important strategies to make money.
"Compound Interest is the eighth wonder of the world, understand it, earns it, he who doesn't pay it" Albert Einstein. As this article is about investment you will need to understand why investing your money is important for growth and making sound investment is a positive manner to acquire wealth.
In business learning saving strategies is massive as it helps you acquire fund over a period of time and there is several methods of investing your income into high return saving account who offers compound interest at varied rates to enable growth. A business needs several type of investments to move forward and be sustainable in the future and having fund to cover the unexpected.
In an attempt to demonstrate the potential growth generated with compound interest I am presenting three methods where compound interest is added to your initial amount invested.
Compound interest table
The tables above demonstrate three methods of compound saving interest.
The first table shows an initial invested amount of £10 000 with an interest rate at 4% after 10 years without increasing initial investment and without withdrawing any money for 10 years your return will be £14 850.99 of saving achieved within 10 years on interest alone.
The second table shows an initial amount of £1000 invested and every month £1000 is added at the end of the year the interest rate of 4% is added to the year ending balance. After 10 years of adding £1000 every month consistently with no break between months or years your return would be £169 836.22 - of saving achieved within 10 years. This result can only be achieve by adding £1000 every month on a constant bases and a 4% interest rate added to yearly ending balance.
The third table shows an initial amount of £100 invested and every month £100 plus £20 is added hence first month £100 them second month £120 and third month £140 and so on at the end of the year you have £2520 ending balance with interest rate of 4% added to yearly balance after 5 years your return would be £14 195.09 of saving achieved within 5 years - This result can only be achieved by constantly adding every month your initial amount plus £20 without break within a month or putting less money on some months and not withdrawing any money.
It is interesting to see how the saving achieved after a period of 10yrs with a high investment and increasing on interest alone give similar result as starting with a low amount and adding initial value plus £20 monthly after 5 years saving achieved is only different by £655.90 and if you were to carry on for another 5 years you would achieved greater saving than investing a large sum without adding anymore fund to it for 10 years where your saving increase will only be generated through interest alone.
Hence the best method to use are the second and the third which gives you a higher return on investment after a 10 years period with consistency of monthly amount decided and no withdrawal or break in payment. The first methods is only useful to generate saving on interest alone if the initial investment is sizeable and left untouched for a long period of time.
The importance of business saving
A business need to do saving for the unexpected which can happen when running your business and can help toward business sustainability. You can re-invest a small portion 5 to 10% maximum in other investment methods such as buying shares or more volatile with high risk investment which will not going to be discussing in this article.
Another thing do confuse business saving with petty cash or cash flow for your business these are seperate money needed for your business to run smoothly daily. You can use a percentage of your profit and put it in a high interest saving account but they usually come with tax to be paid on your saving so find a saving account which offer lower tax if unsure it is best to speak to a reputable financial adviser which will find the best option for you depending on your circumstances.
Higher interest rate ISA can be upto 8% the highest but may require you to start with £5000 as an initial investment going upward. For lower amount the interest start at 2% going up you will need to shop around for the best one for you.
Saving for your business is a long-term strategy and should feature in your business plan under the criteria Financial Goals and place under the long-term financial strategy heading with a saving projection of potential income gain over a long period of time as demonstrated in the latter tables.
Another way to increase your business income
In business on occasion your customers does not pay you for services render and this cause a sizeable loss of income and take a chunk out of any profit which could be made, hence it is important to chase up your bad debt because recovering the fund is all part of your achievable profit.
Therefore you are legally obliged to make any reasonable attempt to recover money loss due to non-payment for services and can legally add late fee charge to money due depending on length of time prior to take your customer to court and the court ruling in your favor and if after judgement no payment is received you can make an application to the bailiff to collect your fund.
On occasion some business do not bother either because they are too small or think it does not matter but it does matter we at Girlfridayz can support you to do your letter requesting fund due to you plus add the late fee for you and send the notification of payment letter to your customers on your behalf.
We are cheaper than a debt collection agencies which will charge you between 20 to 50 % of the debt amount to be paid to them if they are successful in recovering your fund plus court fee to take your customers to court and bailiff fee usually an higher fee than the fee you were going to pay to money claim to do it yourself.
On the other hand us at Girlfridayz only charge you £15 per hours and does not ask any percentage of your money if it is recovered for you before the court is involved. See for yourself how effective we can be and efficient too most our customers are happy with the result as some recovered their fund without the need for court involvement.
We do not provide business support for persistent non-payer who will need to be send to the county court to deal with the debt.
Did you know that if within the fiscal year you do not recover your severe debt after all attempt fail you can declare the amount owed as allowable expenses on your tax return for that year.
However if you recover that money the following year you will need to add it to your tax return as income gain for that year as you would have declared it as expenses the previous tax year.
We can support you with your tax return preparation by doing an income and expenses excel or google sheet for you all part of the service we provide to businesses as record keeping is important and a legal obligation too and update for you monthly providing you provide us with your expenses receipt and income made during the month.
Small business, micro business and start-up business tend to use us for this service because we are here to help to start up or continue best practice and ensure your business processes are finely tuned.
The 2 sound strategies to make make money
Before we reveal the 2 most important strategies to make money lets us give you the 10 fundamentals of sound investing.
The Golden Rules
1.) Planning your finance , think long-term and be sensible
2.) Be guarded against permanent loss of principal and decline of purchase power
3.) Reduce investing cost. High-cost investment does not always mean high return so be wise in selecting the best for you.
4.) Keep it simple make sure it is simple to grasp and put in place. Complex or fancy investment may sound smart but could mean an attempt to conceal information from you.
5.) Diversify your asset it reduce risk. Do not over diversify and do not confuse a diversified investment and a collection of investment. The difference lie in the correlation Ie:- Have different investment in quality equities and assets that diversification but having various investment in the same sector is not diversification but a collection of investment.
6.) Buy quality assets if a company has too much debt don't buy it. If it's losing money don't buy it. If it doesn't have a history of consistent and long-term sales don't buy it.
7.) Speculate the market and invest 5% to 10% of your money in speculative asset Ie: share on the stock market which are governed by market rules
8.) Be sensible the old saying "too good to be true" is true has there is no such thing as high return strategy with low risk that does not exist.
9.) Minimise tax liability for investment incomes and investment gains
10.) Long-term strategy prevail. Timing the market consistently is not advised has it's subject to change. Long-term investment has low-risk as you apply the principal above.
Here are the 2 sound strategies to make money that lies within us are patience and discipline because this article discussed methodology to make money and they require careful planning, long-term financial goal, patience as your money grow and discipline to ensure that you do not waver from your goals to be wealthy.
Remember the saying "transfer of wealth from the impatient to the patient" - simply mean patience is the key component to successful wealth building and discipline is the component which enable you to ensure you secure wealth.
A Huge Announcement
We are proud to announce that our business Girlfridayz is the winner of The Be Mongul award 2018 recognising the most influential & inspirational Black Business Owners in Britain.
The award ceremony will take place on the 22/11/18 doors open at 6pm and start at 7pm Natwest, 280 Bishopsgate London EC2M
We have been recognised has one of the movers and shakers of business for our entrepreneurship skills, drive and business acumen and we cannot wait to collect our award. Powered by NatWest and Partnered by Rich Visions.